Economic Growth Madagascar

In Madagascar, donors have traditionally counted for almost half of the Government’s budget and have been, by far, the main source of funding in social sectors.

Since the beginning of the crisis, official aid toward education, health and social protection surged, reaching almost US$260 million in 2010 against US$180 million in 2008. Nonetheless, this increase failed to improve significantly social indicators.

As OECD countries struggle to reduce their fiscal deficits, consider the case of Madagascar. Half of its budget was financed by external assistance which, as a result of political turmoil in the country, has disappeared.

After one year (still counting) of political crisis, uncertainty remains the key word in Madagascar.

Private activities have rebounded compared to the first quarter 2009 but remain below pre-crisis levels. Fiscal policy, globally cautious, went through several “stop and go” episodes, sending mixed messages to financial markets, especially visible through the recent variations in the exchange and interest rates.

This uncertainty is exacerbated by the lack of consistency in policy decisions.